THE GYMBOREE CORPORATION 
By SAN FRANCISCO, Aug. 18 /PRNewswire-FirstCall/ -- The Gymboree Corporation (Nasdaq: GYMB) today reported earnings of $12.3 million or $0.44 per diluted share for the second fiscal quarter ended July 31, 2010. This compares to earnings of $12.2 million or $0.41 per diluted share for the same period of the prior year.
Net sales from retail operations for the second quarter totaled $219.3 million, a 3% increase from $212.3 million in net sales from retail operations for the second fiscal quarter of the prior year. As previously reported, comparable store sales from retail operations for the second fiscal quarter decreased 3% versus the same period last year. Total net sales for the second fiscal quarter were $222.7 million, a 3% increase compared to total net sales of $215.4 million for the second fiscal quarter last year.
Gross profit for the second fiscal quarter was 43.5% of sales, an improvement of over 20 basis points compared to the prior year rate of 43.3%. Selling, General and Administrative (SG&A) expenses were $77.9 million for the second fiscal quarter compared to $75.8 million for the same fiscal quarter of the prior year. SG&A expenses as a percentage of sales were 35.0% versus 35.2% for the second quarter of the prior year. Operating income increased to $19.0 million or 8.5% of sales compared to $17.4 million or 8.1% of sales for the comparable fiscal quarter of the prior year.
Business Outlook
For the third fiscal quarter of 2010, the Company expects comparable store sales performance to be slightly negative to flat versus the same period of the prior year. The Company expects earnings for the third fiscal quarter in the range of $1.25 to $1.30 per diluted share.
Management Presentation
The live broadcast of the discussion of second quarter 2010 earnings results will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET) on Wednesday, August 18, 2010. To listen to the live broadcast over the Internet, please log on to www.gymboree.com, go to "About Us" at the bottom of the home page, go to "Investors & Media" and then "Conference Calls & Webcasts." A replay of the call will be available two hours after the broadcast through midnight ET, Wednesday, August 25, 2010, at 800-642-1687, passcode # 54962795, as well as archived on our website at the same location as the live webcast.
About The Gymboree Corporation
The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of July 31, 2010, the Company operated a total of 1,019 retail stores: 633 Gymboree® stores (594 in the United States, 35 in Canada, 2 in Puerto Rico and 2 in Australia), 147 Gymboree Outlet stores, 120 Janie and Jack® shops and 119 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com, and offers directed parent-child developmental play programs at 678 franchised and Company-operated Gymboree Play & Music® centers in the United States and 33 other countries.
Forward-Looking Statements
The foregoing financial information for the second fiscal quarter ended July 31, 2010, is unaudited and subject to quarter-end and year-end adjustment. The foregoing paragraphs contain forward-looking statements relating to The Gymboree Corporation's anticipated sales growth and future financial performance. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results could vary materially as a result of a number of factors, including high levels of unemployment and consumer debt, volatility in the financial markets, general economic conditions, customer reactions to new merchandise, service levels and new concepts, success in meeting our delivery targets, the level of our promotional activity, our gross margin achievement, our ability to appropriately manage inventory, effects of future embargos from countries used to source product, and competitive market conditions. Other factors that may cause actual results to differ materially include those set forth in the reports that we file from time to time with the Securities and Exchange Commission, including our annual report on Form 10-K for the year-ended January 30, 2010. These forward-looking statements reflect The Gymboree Corporation's expectations as of August 18, 2010. The Gymboree Corporation undertakes no obligation to update the information provided herein.
Gymboree, Janie and Jack, Crazy 8, and Gymboree Play & Music are registered trademarks of The Gymboree Corporation.
EXHIBIT A
THE GYMBOREE CORPORATION
------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(In thousands, except per share and operating data)
(Unaudited)
13 Weeks Ended 13 Weeks Ended
July 31, August 1,
2010 2009
---- ----
Net sales:
Retail $219,293 $212,262
Play & Music and other 3,456 3,132
----- -----
Total net sales 222,749 215,394
Cost of goods sold, including
buying and occupancy expenses (125,853) (122,166)
-------- --------
Gross profit 96,896 93,228
Selling, general and
administrative expenses (77,897) (75,809)
------- -------
Operating income 18,999 17,419
Other income 103 201
--- ---
Income before income taxes 19,102 17,620
Income tax expense (6,848) (5,459)
------ ------
Net income $12,254 $12,161
======= =======
Net income per share:
Basic $0.45 $0.42
Diluted $0.44 $0.41
Weighted average shares
outstanding:
Basic 27,170 28,654
Diluted 28,009 29,854
Operating Data:
Stores Open at the Beginning
of the Period 987 901
New Stores 34 25
Closed Stores (2) -
--- ---
Stores Open at the End of the
Period 1,019 926
===== ===
Gross Store Square Footage 2,033,000 1,818,000
Merchandise Inventories per
Square Foot $72 $71
Supplemental Financial
Information:
Depreciation and amortization $9,958 $9,195
Interest income, net $44 $174
Stock-based compensation $3,977 $4,478
26 Weeks Ended 26 Weeks Ended
July 31, August 1,
2010 2009
---- ----
Net sales:
Retail $469,284 $440,241
Play & Music and other 6,290 6,028
----- -----
Total net sales 475,574 446,269
Cost of goods sold, including
buying and occupancy expenses (248,504) (243,512)
-------- --------
Gross profit 227,070 202,757
Selling, general and
administrative expenses (159,412) (149,154)
-------- --------
Operating income 67,658 53,603
Other income 132 509
--- ---
Income before income taxes 67,790 54,112
Income tax expense (26,350) (20,143)
------- -------
Net income $41,440 $33,969
======= =======
Net income per share:
Basic $1.49 $1.19
Diluted $1.44 $1.15
Weighted average shares
outstanding:
Basic 27,873 28,551
Diluted 28,759 29,655
Operating Data:
Stores Open at the Beginning
of the Period 953 886
New Stores 69 40
Closed Stores (3) -
--- ---
Stores Open at the End of the
Period 1,019 926
===== ===
Gross Store Square Footage 2,033,000 1,818,000
Merchandise Inventories per
Square Foot $72 $71
Supplemental Financial
Information:
Depreciation and amortization $19,544 $18,177
Interest income, net $45 $421
Stock-based compensation $8,538 $8,351
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
(Unaudited)
July 31, January 30, August 1,
2010 2010 2009
---- ---- ----
Current Assets
Cash and cash equivalents $132,416 $257,672 $164,745
Accounts receivable 19,070 9,911 16,553
Merchandise inventories 145,501 121,133 129,293
Prepaid income taxes 20,733 - 12,487
Prepaid expenses and deferred
taxes 19,495 19,778 28,517
Total current assets 337,215 408,494 351,595
------- ------- -------
Property and Equipment, net 217,819 205,461 209,961
Deferred Taxes and Other Assets 21,483 22,175 20,818
------ ------ ------
Total Assets $576,517 $636,130 $582,374
======== ======== ========
Current Liabilities
Accounts payable $43,381 $46,470 $55,650
Accrued liabilities 74,063 69,295 70,528
Income tax payable - 5,381 -
--- ---
Total current liabilities 117,444 121,146 126,178
------- ------- -------
Long Term Liabilities
Lease incentives and other
liabilities 78,889 76,231 76,504
Stockholders' Equity 380,184 438,753 379,692
------- ------- -------
Total Liabilities and
Stockholders' Equity $576,517 $636,130 $582,374
======== ======== ========
SOURCE The Gymboree Corporation
